ACE CREDIT Principles of Microeconomics Online

1.2 Microeconomics and Macroeconomics

1.3 How Economists Use Theories and Models to Understand Economic Issues

1.4 How To Organize Economies: An Overview of Economic Systems

• Discuss the importance of studying economics
• Explain the relationship between production and division of labor
• Evaluate the significance of scarcity
• Describe microeconomics
• Describe macroeconomics
• Contrast monetary policy and fiscal policy
• Interpret a circular flow diagram
• Explain the importance of economic theories and models
• Describe goods and services markets and labor markets
• Contrast traditional economies, command economies, and market economies
• Explain gross domestic product (GDP)
• Assess the importance and effects of globalization

2.2 The Production Possibilities Frontier and Social Choices

2.3 Confronting Objections to the Economic Approach

• Calculate and graph budget constraints
• Explain opportunity sets and opportunity costs
• Evaluate the law of diminishing marginal utility
• Explain how marginal analysis and utility influence choices
• Interpret production possibilities frontier graphs
• Contrast a budget constraint and a production possibilities frontier
• Explain the relationship between a production possibilities frontier and the law of diminishing returns
• Contrast productive efficiency and allocative efficiency
• Define comparative advantage
• Analyze arguments against economic approaches to decision-making
• Interpret a tradeoff diagram
• Contrast normative statements and positive statements

3.2 Shifts in Demand and Supply for Goods and Services

3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process

3.4 Price Ceilings and Price Floors

3.5 Demand, Supply, and Efficiency

• Explain demand, quantity demanded, and the law of demand
• Identify a demand curve and a supply curve
• Explain supply, quantity supplied, and the law of supply
• Explain equilibrium, equilibrium price, and equilibrium quantity
• Identify factors that affect demand
• Graph demand curves and demand shifts
• Identify factors that affect supply
• Graph supply curves and supply shifts
• Identify equilibrium price and quantity through the four-step process
• Graph equilibrium price and quantity
• Contrast shifts of demand or supply and movements along a demand or supply curve
• Graph demand and supply curves, including equilibrium price and quantity, based on real-world examples
• Explain price controls, price ceilings, and price floors
• Analyze demand and supply as a social adjustment mechanism
• Contrast consumer surplus, producer surplus, and social surplus
• Explain why price floors and price ceilings can be inefficient
• Analyze demand and supply as a social adjustment mechanism

4.2 Demand and Supply in Financial Markets

4.3 The Market System as an Efficient Mechanism for Information

• Predict shifts in the demand and supply curves of the labor market
• Explain the impact of new technology on the demand and supply curves of the labor market
• Explain price floors in the labor market such as minimum wage or a living wage
• Identify the demanders and suppliers in a financial market
• Explain how interest rates can affect supply and demand
• Analyze the economic effects of U.S. debt in terms of domestic financial markets
• Explain the role of price ceilings and usury laws in the U.S.
• Apply demand and supply models to analyze prices and quantities
• Explain the effects of price controls on the equilibrium of prices and quantities

5.2 Polar Cases of Elasticity and Constant Elasticity

5.3 Elasticity and Pricing

5.4 Elasticity in Areas Other Than Price

• Calculate the price elasticity of demand
• Calculate the price elasticity of supply
• Differentiate between infinite and zero elasticity
• Analyze graphs in order to classify elasticity as constant unitary, infinite, or zero
• Analyze how price elasticities impact revenue
• Evaluate how elasticity can cause shifts in demand and supply
• Predict how the long-run and short-run impacts of elasticity affect equilibrium
• Explain how the elasticity of demand and supply determine the incidence of a tax on buyers and sellers
• Calculate the income elasticity of demand and the cross-price elasticity of demand
• Calculate the elasticity in labor and financial capital markets through an understanding of the elasticity of labor supply and the elasticity of savings
• Apply concepts of price elasticity to real-world situations

6.2 How Changes in Income and Prices Affect Consumption Choices

6.3 Behavioral Economics: An Alternative Framework for Consumer Choice

• Calculate total utility
• Propose decisions that maximize utility
• Explain marginal utility and the significance of diminishing marginal utility
• Explain how income, prices, and preferences affect consumer choices
• Contrast the substitution effect and the income effect
• Utilize concepts of demand to analyze consumer choices
• Apply utility-maximizing choices to governments and businesses
• Evaluate the reasons for making intertemporal choices
• Interpret an intertemporal budget constraint
• Analyze why people in America tend to save such a small percentage of their income

7.2 Production in the Short Run

7.3 Costs in the Short Run

7.4 Production in the Long Run

7.5 Costs in the Long Run

• Explain the difference between explicit costs and implicit costs
• Understand the relationship between cost and revenue
• Understand the concept of a production function
• Differentiate between the different types of inputs or factors in a production function
• Differentiate between fixed and variable inputs
• Differentiate between production in the short run and in the long run
• Differentiate between total and marginal product
• Understand the concept of diminishing marginal productivity
• Understand the relationship between production and costs
• Understand that every factor of production has a corresponding factor price
• Analyze short-run costs in terms of total cost, fixed cost, variable cost, marginal cost, and average cost
• Calculate average profit
• Evaluate patterns of costs to determine potential profit
• Understand how long run production differs from short run production.
• Calculate long run total cost
• Identify economies of scale, diseconomies of scale, and constant returns to scale
• Interpret graphs of long-run average cost curves and short-run average cost curves
• Analyze cost and production in the long run and short run

8.2 How Perfectly Competitive Firms Make Output Decisions

8.3 Entry and Exit Decisions in the Long Run

8.4 Efficiency in Perfectly Competitive Markets

• Explain the characteristics of a perfectly competitive market
• Discuss how perfectly competitive firms react in the short run and in the long run
• Calculate profits by comparing total revenue and total cost
• Identify profits and losses with the average cost curve
• Explain the shutdown point
• Determine the price at which a firm should continue producing in the short run
• Explain how entry and exit lead to zero profits in the long run
• Discuss the long-run adjustment process
• Apply concepts of productive efficiency and allocative efficiency to perfectly competitive markets
• Compare the model of perfect competition to real-world markets

9.2 How a Profit-Maximizing Monopoly Chooses Output and Price

• Distinguish between a natural monopoly and a legal monopoly.
• Explain how economies of scale and the control of natural resources led to the necessary formation of legal monopolies
• Analyze the importance of trademarks and patents in promoting innovation
• Identify examples of predatory pricing
• Explain the perceived demand curve for a perfect competitor and a monopoly
• Analyze a demand curve for a monopoly and determine the output that maximizes profit and revenue
• Calculate marginal revenue and marginal cost
• Explain allocative efficiency as it pertains to the efficiency of a monopoly

10.2 Oligopoly

• Explain the significance of differentiated products
• Describe how a monopolistic competitor chooses price and quantity
• Discuss entry, exit, and efficiency as they pertain to monopolistic competition
• Analyze how advertising can impact monopolistic competition
• Explain why and how oligopolies exist
• Contrast collusion and competition
• Interpret and analyze the prisoner’s dilemma diagram
• Evaluate the tradeoffs of imperfect competition

11.2 Regulating Anticompetitive Behavior

11.3 Regulating Natural Monopolies

11.4 The Great Deregulation Experiment

• Explain antitrust law and its significance
• Calculate concentration ratios
• Calculate the Herfindahl-Hirschman Index (HHI)
• Evaluate methods of antitrust regulation
• Analyze restrictive practices
• Explain tying sales, bundling, and predatory pricing
• Evaluate a real-world situation of possible anticompetitive and restrictive practices
• Evaluate the appropriate competition policy for a natural monopoly
• Interpret a graph of regulatory choices
• Contrast cost-plus and price cap regulation
• Evaluate the effectiveness of price regulation and antitrust policy
• Explain regulatory capture and its significance

12.2 Command-and-Control Regulation

12.3 Market-Oriented Environmental Tools

12.4 The Benefits and Costs of U.S. Environmental Laws

12.5 International Environmental Issues

12.6 The Tradeoff between Economic Output and Environmental Protection

• Explain and give examples of positive and negative externalities
• Identify equilibrium price and quantity
• Evaluate how firms can contribute to market failure
• Explain command-and-control regulation
• Evaluate the effectiveness of command-and-control regulation
• Show how pollution charges impact firm decisions
• Suggest other laws and regulations that could fall under pollution charges
• Explain the significance of marketable permits and property rights
• Evaluate which policies are most appropriate for various situations
• Evaluate the benefits and costs of environmental protection
• Explain the effects of ecotourism
• Apply marginal analysis to illustrate the marginal costs and marginal benefits of reducing pollution
• Explain biodiversity
• Analyze the partnership of high-income and low-income countries in efforts to address international externalities
• Apply the production possibility frontier to evaluate the tradeoff between economic output and the environment
• Interpret a graphic representation of the tradeoff between economic output and environmental protection

13.2 How Governments Can Encourage Innovation

13.3 Public Goods

• Identify the positive externalities of new technology
• Explain the difference between private benefits and social benefits and give examples of each
• Calculate and analyze rates of return
• Explain the effects of intellectual property rights on social and private rates of return
• Identify three U.S. Government policies and explain how they encourage innovation
• Identify a public good using nonexcludable and non-rival as criteria
• Explain the free rider problem
• Identify several sources of public goods

14.2 Wages and Employment in an Imperfectly Competitive Labor Market

14.3 Market Power on the Supply Side of Labor Markets: Unions

14.4 Bilateral Monopoly

14.5 Employment Discrimination

14.6 Immigration

• Describe the demand for labor in perfectly competitive output markets
• Describe the demand for labor in imperfectly competitive output markets
• Explain what determines the going market wage rate
• Define monopsony power
• Explain how imperfectly competitive labor markets determine wages and employment, where employers have market power
• Explain the concept of labor unions, including membership levels and wages
• Evaluate arguments for and against labor unions
• Analyze reasons for the decline in U.S. union membership
• Explain how firms determine wages and employment when a specific labor market combines a union and a monopsony
• Analyze earnings gaps based on race and gender
• Explain the impact of discrimination in a competitive market
• Identify U.S. public policies designed to reduce discrimination
• Explain how immigration affects labor market outcomes

15.2 The Poverty Trap

15.3 The Safety Net

15.4 Income Inequality: Measurement and Causes

15.5 Government Policies to Reduce Income Inequality

• Explain economic inequality and how the poverty line is determined
• Analyze the U.S. poverty rate over time, noting its prevalence among different groups of citizens
• Explain the poverty trap, noting how government programs impact it
• Identify potential issues in government programs that seek to reduce poverty
• Calculate a budget constraint line that represents the poverty trap
• Identify the antipoverty government programs that comprise the safety net
• Explain the the safety net programs' primary goals and how these programs have changed over time
• Discuss the complexities of these safety net programs and why they can be controversial
• Explain the distribution of income, and analyze the sources of income inequality in a market economy
• Measure income distribution in quintiles
• Calculate and graph a Lorenz curve
• Show income inequality through demand and supply diagrams
• Explain the arguments for and against government intervention in a market economy
• Identify beneficial ways to reduce the economic inequality in a society
• Show the tradeoff between incentives and income equality

16.2 Insurance and Imperfect Information

• Analyze the impact of both imperfect information and asymmetric information
• Evaluate the role of advertisements in creating imperfect information
• Identify ways to reduce the risk of imperfect information
• Explain how imperfect information can affect price, quantity, and quality
• Explain how insurance works
• Identify and evaluate various forms of government and social insurance
• Discuss the problems caused by moral hazard and adverse selection
• Analyze the impact of government regulation of insurance

17.2 How Households Supply Financial Capital

17.3 How to Accumulate Personal Wealth

• Describe financial capital and how it relates to profits
• Discuss the purpose and process of borrowing, bonds, and corporate stock
• Explain how firms choose between sources of financial capital
• Show the relationship between savers, banks, and borrowers
• Calculate bond yield
• Contrast bonds, stocks, mutual funds, and assets
• Explain the tradeoffs between return and risk
• Explain the random walk theory
• Calculate simple and compound interest
• Evaluate how capital markets transform financial capital

18.2 Special Interest Politics

18.3 Flaws in the Democratic System of Government

• Explain the significance of rational ignorance
• Evaluate the impact of election expenses
• Explain how special interest groups and lobbyists can influence campaigns and elections
• Describe pork-barrel spending and logrolling
• Assess the median voter theory
• Explain the voting cycle
• Analyze the interrelationship between markets and government

19.2 What Happens When a Country Has an Absolute Advantage in All Goods

19.3 Intra-industry Trade between Similar Economies

19.4 The Benefits of Reducing Barriers to International Trade

• Define absolute advantage, comparative advantage, and opportunity costs
• Explain the gains of trade created when a country specializes
• Show the relationship between production costs and comparative advantage
• Identify situations of mutually beneficial trade
• Identify trade benefits by considering opportunity costs
• Identify at least two advantages of intra-industry trading
• Explain the relationship between economies of scale and intra-industry trade
• Explain tariffs as barriers to trade
• Identify at least two benefits of reducing barriers to international trade

20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions

20.3 Arguments in Support of Restricting Imports

20.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally

20.5 The Tradeoffs of Trade Policy

• Explain protectionism and its three main forms
• Analyze protectionism through concepts of demand and supply, noting its effects on equilibrium
• Calculate the effects of trade barriers
• Discuss how international trade influences the job market
• Analyze the opportunity cost of protectionism
• Explain how international trade impacts wages, labor standards, and working conditions
• Explain and analyze various arguments that are in support of restricting imports, including the infant industry argument, the anti-dumping argument, the environmental protection argument, the unsafe consumer products argument, and the national interest argument
• Explain dumping and race to the bottom
• Evaluate the significance of countries’ perceptions on the benefits of growing trade
• Explain the origin and role of the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT)
• Discuss the significance and provide examples of regional trading agreements
• Analyze trade policy at the national level
• Evaluate long-term trends in barriers to trade
• Assess the complexity of international trade
• Discuss why a market-oriented economy is so affected by international trade
• Explain disruptive market change